I think I have figured out what the black powder/liquid is. The Cult believes that the Mother Stone held resurrecting powers, and they started mining the Stones. This explains why there are holes all over the formations, as well as all the black ichor in the factory area, and the mine.

The black powder that Walter used in his Ritual of the Holy Assumption was from the Mother Stone, and it may be the same liquid that he was forced to drink when he was in the Water Prison.